As the electricity sector transitions into a more decentralized and carbon neutral industry, the need for a power system that is highly adaptable to renewable energy sources keeps growing. There is a new generation of platforms that can unlock the necessary flexibility, and there have been a number of projects in the past few years to test out a variety of models with different goals and scopes. In part two of our series on flexibility platforms we recently introduced two of the three categories as defined by Frontier Economics’ 2021 report, Review of Flexibility Platforms, and in this article we discuss the third category - marketplaces - and the four platforms that belong to it.
As the name suggests, these platforms carry out the most important functions of a marketplace: they run auctions, clear transactions and settle payments between market participants. They can connect to existing markets, but do not need to do so in order to support procurement. Frontier Economics differentiates between two types within this category: continuously-clearing market platforms and platforms based on a closed-auction format.
Continuously-clearing market platforms
Launched by Western Power Distribution, a Bristol-based electricity distribution network operator (DNO), the project NODES-IntraFlex ran from 2019 to 2021 and used the independently operated NODESmarket marketplace platform, which trades decentralized flexibility in the energy market. It trialed a short-term marketplace for the procurement of DNO flexibility and aimed to enable independent aggregators to participate alongside Balance Responsible Parties (i.e. parties responsible for maintaining supply and demand on the energy market within their own portfolio). In late 2020, more than 50MW of flexibility services were procured across 241 trades on NODES ShortFlex market over a two-month period. The project showed that it was possible for different types of flexibility to compete on a level playing field and for DNOs like Western Power Distribution to buy flexibility at a fair price when and where they needed it.
The project NODES-NorFlex started in October 2019 with the objective “to develop tomorrow's power grid by enabling flexible power consumption.” Used over a three-year period by Norwegian DSOs Agder Energi and Glitre Energi, Norwegian TSO Statnett SF, and NODESmarket, the platform tested different technological solutions to demonstrate how flexibility offered at the local level can be made available to the existing TSO reserve market. Participating households and companies had the opportunity to get remunerated for reducing their power consumption when the grid load was high. In January 2022, two months before the project ended, 3MW of flexibility from the NODES marketplace was transacted in Statnett’s mFRR market, making it the first transaction within the NorFlex pilot project. The pilot project broke new ground by testing how to offer a local flexibility market simultaneously to both local grid companies and the TSO’s balancing markets. It showed that it was possible to contribute to increased liquidity in markets and to bring more profit for customers.
Platforms based on a closed-auction format
Piclo Flex is an independent flexibility marketplace operational in the United Kingdom that enables flexibility to be transacted between flexibility service providers (FSPs) and DSOs, across both time and location dimensions. Run by London-based company Piclo, which develops software to make electricity grids smart, flexible and sustainable, the platform allows flexibility providers to register and qualify their flexible assets, and to take part in bids to win flexibility contracts. From fully outsourced procurement with in-house transaction clearing through auction facilitation, flexibility requirement visibility and advertisement to asset prequalification, Piclo Flex offers grid operators an API-enabled, automated modular service. UK Power Networks, SP Energy Networks and Electricity North West are the most prominent DSOs that use the platform, and the TSO National Grid is also involved in the project. To date, Piclo Flex has enabled 667 MW capacity to be procured and 14 GW flexibility capacity to be registered, and is about to accelerate the development of local flexibility markets outside the UK, too: Piclo recently launched a partnership with Lithuanian DNO, Energijos Skirstymo Operatorius.
Representing the south of Europe, eSIOS-CECRE-CoordiNet, owned and operated by the Spanish TSO Red Eléctrica de España (REE), focuses on the localized procurement of congestion management services by DSOs like Endesa, i-DE, UFD, EDP, and Viesgo. The coordination of procurement, however, is done by REE. The project takes its name from a marketplace platform that receives bids for downwards and upwards redispatch for TSO/DSO congestion management purposes (eSIOS), an operating platform that monitors real-time production of FSPs and has control over asset activation (CECRE) and the local platforms that integrate the coordinating functions to manage the interactions between FSPs, eSIOS and CECRE (CoordiNet). All FSPs that are eligible to trade on the day-ahead wholesale market can take part in the project, and they may include any generating or storage units that have a minimum (or pooled) capacity of at least 1 MW.
In the fourth and final article of our series about flexibility platforms, we will discuss what the future may look like for these digital platforms.
